How to tackle carbon footprint reporting in logistics
Transportation Management

How to tackle carbon footprint reporting in logistics

Find out how logistics departments are mastering the CO2 footprint: government regulations, the Green Deal and the CSRD Directive are shaping the requirements.

Government regulations, accelerating climate change, rising energy prices and mounting customer requirements: Their carbon footprint is of growing relevance to logistics departments of industrial companies. What are the legal requirements that need to be taken into account for effective, compliant reporting, what challenges need to be met and how can they be approached best?

With the European Green Deal, Europe is striving for climate neutrality and increased sustainability by 2050. This will result in a wealth of regulations and guidelines that will heavily impact logistics practices of industrial companies.

A key element of the Green Deal is the European Corporate Sustainability Reporting Directive (CSRD) that took effect in 2023. "The CSRD puts sustainability reporting on an equal footing with financial reporting," Talia Baxmann, Sustainability Manager at Gryn, an IT provider for carbon footprint management in logistics, explains. In the future, sustainability reports will have to be prepared according to uniform standards and published in the annual report. "For companies, this means they must both calculate CO2 emissions and state clear reduction targets in their reports."

First reports due as early as 2024

Whether companies have to report in accordance with the CSRD at an earlier or a later time depends on several factors, like turnover or number of employees (more by Deloitte). Generally speaking, bigger companies must start reporting earlier than smaller ones - the first CSRD reports must be prepared in 2025 covering the year 2024.

And yet, many smaller companies are likely also going to be affected by the “2025 for 2024” timeline. "At the end of the day, there’s a trickle-down effect: larger companies have to start CSRD reporting earlier, but they also need to report upstream and downstream emissions for their own footprint. Therefore, they require information on CO2 emissions for purchased goods from their suppliers," explains Oliver Ritzmann, founder and CEO of Gryn. In that respect, smaller companies also need to address the issue of carbon footprint reporting at an early stage.

Logistics departments have to deliver data

In practice, the process sees corporate sustainability departments approach the respective teams to request footprint data for the various departments. Granting that request isn’t necessarily easy for logistics teams: How can we record the footprint of our activities? What data do we need to collect, where do we get it from and how do we calculate the footprint?

"There are so many approaches, methodologies, standards and tools - and everyone calculates the footprint differently. It's often not easy to choose the correct and appropriate ones," Talia Baxmann shares about her practical experience.

Data quality is crucial

Some industrial companies, for example, that often do not have their own fleet of vehicles, use data provided by the transport service providers in their transportation management. These emissions then fall into Scope 3 in the footprint, which includes both upstream and downstream transportation.

Some industrial companies calculate emissions in transportation management independently on the basis of deliveries received and sent. Often, averaged data is used that depends on factors like transport mode, weight, and distance. "That is where the problem starts: Everyone calculates distances differently, for example," explains Talia Baxmann.

"It is crucial that the data is recorded in a trustworthy manner – that is in a high quality and in accordance with regulatory requirements," says Oliver Ritzmann. "Auditors have to audit the companies' CSRD reports, after all."

This is where tools like the Gryn platform come into play: on the one hand, the Gryn tool specifies precisely which data is required for a calculation. On the other hand, it also helps to assess the quality of data from transport service providers. "For example, we show exactly on what basis and in what quality transport service providers report their data," says Oliver Ritzmann.

New ISO standard brings clarity

The ISO 14083 standard published in March 2023, which provides a comprehensive approach to calculating and reporting greenhouse gas emissions from transportation processes, could play a significant role with regard to data quality. "All logistics companies should keep this standard in mind," says Talia Baxmann. "It not only ensures compliance with CSRD requirements, but also enables good comparability - when selecting transport service providers for sustainability criteria in shipping, for example."

ISO 14083 replaces the European standard EN 16258 and is in line with recognized standards such as the GHG Protocol, ISO 14064 and the GLEC framework. Above all, it focuses not (only) on the quantification and reporting of greenhouse gas emissions of individual transports, but also of entire multimodal and global transportation chains - including emissions at distribution nodes (ports, hubs, etc.) as well as for transport packaging.

Using AI to automatically create a decarbonization plan

After a company has recorded its logistics emissions comes the next necessary step: drawing up a plan to reduce CO2 emissions. This is needed, because the CSRD requires companies to report not only their footprint, but also a reduction plan.

Software can be a big help here, too. Oliver Ritzmann gives an example: "Let's say you want to reduce your emissions by ten percent within the next 12 months. The Gryn AI Manager creates an individual decarbonization roadmap based on historical shipment data and other information. This contains practical suggestions for measures suitable to achieve the reduction target."

According to the Gryn CEO, what is so great about that is it doesn't have to be an extensive project. Much of it is plug & play, you can simply get started and achieve transparency quickly. "Companies should therefore act sooner rather than later and simply get started with their carbon footprint management."